Don't get left in the dust: How to build a virtuous circle

Tue, 2016-09-20 10:28 -- SCC Staff

If you’re not growing, you’re getting left behind. Durham, NC, is one of those growing rapidly. The city, leveraging expertise from three nearby universities, has nurtured the growth of several innovative high-tech firms. They, in turn, helped the city’s per capita GDP grow 28% since 2001 — nearly ten times the growth elsewhere in the state.

It’s not just Durham. The Economist found that America’s 50 richest cities produce 34% more per resident than the rest. And their success can come at the expense of everyone else. People are attracted to success. That success is a magnet, attracting innovative companies and smart workers.

The success in these leading cities creates even more success — a virtuous circle. You can create a virtuous circle in your own city. We’ve created a series of articles to help. Today, we begin with the keys to success and a checklist. — Jesse Berst


Cities that think about their regional attributes, that invest in digital, transit, sustainability and education infrastructures and that pay attention to long range planning and good management are ahead of the game in initiating the virtuous circle of municipal benefits.

What is this virtuous circle? The Economist describes the results in a recent article on the some of America’s most successful cities. Workforce development investments (like recruiting employers, supporting great schools or training residents), sustainability investments (like efficient energy sources, clean water and preservation of natural resources), efficient public services (like parks, roads, transit and financially sound government) all reinforce each other to make your city stronger.

If keeping the city running within the limits of the available operating budget is the top problem you face as a municipal CEO, then doesn’t it make sense to pursue this virtuous circle? Infrastructure capacity brings new business investment which brings higher incomes which brings more talented immigrants which brings prosperity which brings more growth which brings more investment. This “virtuous circle” is highlighted in an Economist article on “The Great Divergence.” Done right, this virtuous circle leads to revenue growth, satisfied citizens, new business investment — and more growth.

The two keys to success
For thousands of years a city’s success was based on the fortuity of its geographical location. Today a city located anywhere can exert a great control over its destiny thanks to the explosion of ICT (information, communications and technology) tools. With the proper pre-conditions, ICT tools can affect a city’s ramp up into the virtuous circle.

The process starts with leadership in the city. Leaders offer a positive vision for the future. Leaders find ways to spark interactions between the city’s stakeholders, including those representing workforce interests, sustainability and public services. These sparks ignite new ideas and reinforce progress forward. These sparks of interaction are sustained by communication and data. The new generation of ICT tools can facilitate this communication and provide the data.

The best of these tools help knit together the organizational and intergovernmental resources available to the city. Under good governmental planning, ICT can weave together data from the city’s operations, from regional utilities, from national data bases and from citizens, themselves, to create a data platform for improving planning, budgeting and operations. The ICT tools can combine a wide range of information in a way that strengthens the capacity of the city’s managers to analyze current needs, predict future needs and craft an effective, data based long term plan of action for the management of the city. Growing evidence suggests private sector investment is more attracted to cities which have these capabilities.

Private sector investments overlaid on already growing city economies create a multiplier effect which act as a power surge to a region’s normal growth in size and wealth. This growth compounds over time. Like money in a bank account with 1.5% interest compared to money in a bank account with 5% interest. A few years down the road, the asset value difference is substantial.

Steps to Build Your City’s Virtuous Circle Future
Talented and ambitious workers want to work in cities and are moving to cities with the best options. Businesses want to invest and move their financial capital to cities with the best options. City officials have the opportunity optimize the city’s chances to receive these assets of human talent and private investment.

Checklist for Cities Building the “Virtual Circle”

  1. City Leaders’ Vision of a better future
  2. Digital capacity including fiber backbone, civic IoT and software platform to power and to integrate the flow of information
  3. Transit and other utilities effective for citizens, business and industry
  4. Education to produce civic minded innovative thinkers with competence in math, science, finance and engineering
  5. Long Range Planning to meet population growth requirements and city government revenue needs
  6. Good Management responsive to citizens’ needs independent of their wealth, religion or nation of origin; protective of their privacy, proactive on behalf of the future population and vigilant in routing out corruption and enforcing the rule of law

Smart Cities Readiness Guide…
The Smart Cities Readiness Guide is an online resource that helps you build a vision for the future of your city, craft a plan of action and measure your progress. Join the Council to access it for free and begin building a virtuous circle in your own city.